I assume that Joyent has tuned their MySQL install, so it only seems fair not to use the default configuration on the EC2 test. If you look at Vadim's EBS benchmarks (particularly random read/write) it looks like they may have a very good product, but instead we're left with the impression that they have something to hide.
1,245 transactions per second isn't very much these days if they are simple queries. There are plenty of mysql installations doing ten times that.
I'll update this post if they respond to me on twitter. I'd honestly like to dissect and look at what they're doing.
Update: Joyent provided an this:
@morgo watch for a blog post this week with the details. configurations and results of the internal test available now on the site #mysql